Ideas, Information, Capital

Companies finding creative entry routes into Africa

The growth story in Africa is attracting companies that had previously not considered it a priority market. One such example is in commodity trading. In addition to the usual spot and futures trading in raw commodities, more and more firms are engaged in merchant trading, supplying refined commodities that are in grater demand due to increased economic growth. For example, as oil exploration continues all over the continent, traders have taken note of the lack of refining capacity and are looking to fill the void.

The appearance of this type of trading is a consequence of the uneven nature of African growth. Sometimes industrial and logistical systems lag behind overall growth in many African economies. Having demonstrated that there is demand in the market, the next logical step would be to set up refining capacity. The question then becomes, why has it not happened? It is yet another example of the need to develop higher value industries within Africa. There are good and bad reasons it has not happened. The process of rectifying these deficiencies will create opportunities for investors.